Information and Resources

AARP: Prescription Drug Prices Up

March 6, 2007 -- Prescription drug prices soared nearly twice as high as
inflation last year, the AARP announced today.

But a drug industry trade group calls the AARP report "inaccurate and
misleading."

The AARP reports a 6.2% rise in the manufacturer list price for the
brand-name prescription drugs studied. That's almost double America's general
inflation rate of 3.2% in 2006.

That translates to a rise of nearly $272 in 2006 in drugs costs for the
typical older American, who takes four prescription drugs, says the AARP,
assuming that only brand-name drugs are used and that the full price increase
is passed on to the consumer.

However, the Pharmaceutical Research and Manufacturers of America (PhRMA)
says government data put prescription drug inflation at 1.5% for 2006, with
slowing growth in prescription drug prices.

AARP's Calculations

The report only tracks manufacturer list price. That's the price drugmakers
set for wholesalers and other direct drug purchasers, not counting rebates.
It's not necessarily what you pay at the pharmacy.

The AARP analyzes manufacturer list prices for prescription drugs quarterly.
The new report sums up the AARP's analysis for 2006.

Top 10 Increases

The AARP report includes a list of the 10 brand-name prescription drugs with
the highest rise in manufacturer list price.

Here is that list, along with the percentage increase in the manufacturer
list price.

Generic prescription drugs dropped 2% in their manufacturer list price in
2006, according to the AARP.

Drug Industry Responds

WebMD contacted PhRMA for its comments on the AARP report. PhRMA replied
with a statement from Ken Johnson, PhRMA's senior vice president.

"AARP's allegations about pharmaceutical inflation are inaccurate and
misleading," Johnson says in the statement.

He cites Medicare data showing that increases in prescription medicine
spending have slowed for six consecutive years and are at their lowest level in
a decade.

"In addition, publicly available data from the federal government's
Bureau of Labor Statistics show that prescription drug prices increased only
1.5% from January to December of 2006, well below the 3.3% increase for all
medical care last year," Johnson says.

It's not clear whether that government figure -- 1.5% -- is based on the
same drugs and manufacturer list prices as in the AARP report.

"Expert data strongly suggest that AARP's numbers simply do not reflect
the true amounts paid by seniors for their medicines," Johnson says.
"And they do not reflect the clear downward trend in prescription drug
price growth."